DALLAS – Following recent scrutiny and controversy over the company’s “Circle of Life” program, GameStop Corporation Chief Executive Officer J. Paul Raines has reportedly confided to his executive management team that he has “lost hours of sleep” since the public airing of grievances by anonymous employees about the high-pressure corporate sales strategy.
“Folks, let’s forget about money for just a second and ask ourselves a really important question: how is the GameStop family doing?” wondered the CEO aloud in a conference call he arranged specifically to discuss complaints about the quota-driven system. “Are our employees happy?”
Under the Circle of Life program, GameStop stores and employees are ordered to prioritize and meet strict quotas for high-value transactions such as pre-orders, reward card subscriptions, and trade-ins as well as the sales of used games over less profitable transactions like new games and hardware which are penalized. According to anonymous reports, stores and employees which fail to meet their quotas face punishment, including the regular threat of termination, causing low morale and even leading some employees to discourage customers from purchasing new games and hardware.
“It sounds like our people are under a lot of pressure,” noted Raines, a former long-time executive with The Home Depot, who joined the company in 2010 and whose total annual compensation with GameStop exceeds $9 million. “Are we doing the right thing here?”
The company, which owns approximately 7,000 global retail locations, saw its average profit contribution from GameStop stores increase 23% from $143,000 in 2013 to $176,000 in 2015 when its video game business grew 14% and rose four share points, translating into $524 million in U.S. revenues.
“And what about our guests? Is the Circle of Life meeting their needs and providing them the best value we have to offer?”
“Uh, yup...” answered a voice after a short moment of silence on the conference line.
“Definitely,” added another quickly.
“Sounds good. Well, I feel a lot better,” announced Raines. “Great call everybody. Keep up the good work.”
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